Citibank 2015 Annual Report Download - page 190

172
Investment Strategy
The Company’s global pension and postretirement funds’ investment strategy
is to invest in a prudent manner for the exclusive purpose of providing
benefits to participants. The investment strategies are targeted to produce
a total return that, when combined with the Company’s contributions
to the funds, will maintain the funds’ ability to meet all required benefit
obligations. Risk is controlled through diversification of asset types and
investments in domestic and international equities, fixed-income securities
and cash and short-term investments. The target asset allocation in most
locations outside the U.S. is primarily in equity and debt securities. These
allocations may vary by geographic region and country depending on the
nature of applicable obligations and various other regional considerations.
The wide variation in the actual range of plan asset allocations for the
funded non-U.S. plans is a result of differing local statutory requirements and
economic conditions. For example, in certain countries local law requires
that all pension plan assets must be invested in fixed-income investments,
government funds, or local-country securities.
Significant Concentrations of Risk in Plan Assets
The assets of the Company’s pension plans are diversified to limit the impact
of any individual investment. The U.S. qualified pension plan is diversified
across multiple asset classes, with publicly traded fixed income, hedge funds,
publicly traded equity, and private equity representing the most significant
asset allocations. Investments in these four asset classes are further diversified
across funds, managers, strategies, vintages, sectors and geographies,
depending on the specific characteristics of each asset class. The pension
assets for the Company’s non-U.S. Significant Plans are primarily invested in
publicly traded fixed income and publicly traded equity securities.
Oversight and Risk Management Practices
The framework for the Company’s pension oversight process includes
monitoring of retirement plans by plan fiduciaries and/or management
at the global, regional or country level, as appropriate. Independent risk
management contributes to the risk oversight and monitoring for the
Company’s U.S. qualified pension plan and non-U.S. Significant Pension
Plans. Although the specific components of the oversight process are tailored
to the requirements of each region, country and plan, the following elements
are common to the Company’s monitoring and risk management process:
• periodic asset/liability management studies and strategic asset
allocation reviews;
• periodic monitoring of funding levels and funding ratios;
• periodic monitoring of compliance with asset allocation guidelines;
• periodic monitoring of asset class and/or investment manager
performance against benchmarks; and
• periodic risk capital analysis and stress testing.